After investigating the request, which concerns the discontinuation of cash sales (serving of meals) to civilians at two galleys located at NASL,^1/ the Panel determined that the parties’ dispute should be resolved through the issuance of an Order to Show Cause. In this regard, the parties were ordered to show cause why the Panel should not impose the same result here as it did in Department of the Navy, Naval Air Depot, North Island, San Diego, California and Local 77, International Federation of Professional Technicians and Engineers, AFL-CIO, Case No. 06 FSIP 1 (April 7, 2006)(North Island), which also involved the issue of whether to discontinue cash sales to civilians at the North Island galley. The parties were informed that after considering their responses to the Order to Show Cause, the Panel would take whatever action it deems appropriate to settle the impasse, which could include the issuance of a Decision and Order. Written responses were submitted pursuant to this procedure and the Panel has now considered the entire record.

    The Employer hosts the Navy's entire West Coast fighter/attack capability, and is the Navy's newest and largest master jet air station. The primary aircraft based at NASL include the F/A-18 Hornet Strike Fighter and the F/A-18 E/F Super Hornet, which operate from 2 Fleet Replacement [training] Squadrons and 10 Fleet [operational] Squadrons. In addition, NASL operates three UH-1N Search and Rescue Helicopters, hosts the UC-12B logistics aircraft, and is the site of a Naval hospital. The Union represents approximately 400 professional and nonprofessional employees who work in a wide variety of trades and crafts (WG-2 through –11) and in supply and logistics (GS-4 through –11). The parties’ collective bargaining agreement expired in 1994, but its terms and conditions will remain in effect until a successor agreement is negotiated.

    The parties disagree over whether the ADMIN and OPS galleys should discontinue cash sales to the bargaining-unit employees (BUEs) represented by the Union.

    The Panel should impose the same result at NASL as it did in North Island, and cease cash sales to BUEs at the galleys. This would be consistent with the memorandum issued in September 2004 by the Commander, Navy Installations Command (CNI), which is responsible for Navy-wide shore installation management, requiring the closing of all galleys in the Continental United States to civilians "because of the inability to capture sufficient revenue to make cash sales of meals cost neutral." Keeping the galleys open to civilians is not economically viable or reasonable, as there are dining alternatives available, "including the option employees have of bringing their own food." Nor are the circumstances pertaining to NASL so dissimilar from those at North Island as to negate the Panel’s previous conclusions that the primary mission of the galleys is to feed enlisted military personnel on rations,^2/ and that "the price charged for meals is significantly less than their actual cost."

    Its contention that the continuation of cash sales to civilians is not economically viable is supported by the November 2003 study of the Center for Naval Analyses (CNA) Corporation^3/ and data the Employer compiled from October 2004 through September 2005. CNA concluded that "ashore galleys are expensive to operate, and much of the Navy’s cost is to subsidize the meal purchases of people other than those for whom the galley exists." In this connection, CNA found that the real cost of a ration (defined as a day’s meals – breakfast, lunch, and dinner) at NASL is $22.40, while the price charged to cash customers is only $9.05. Given the 17,496 rations that were sold to civilian cash customers during that period, "the loss to the Navy in FY05 was $233,571.60," including food, military, personnel and operational expenses. Raising prices to recoup its losses, as the Union proposes, is not a "viable alternative" to ceasing cash sales because the "cost per meal would rise significantly above market rates, forcing patrons to logically dine elsewhere." Moreover, even if the Navy wanted to increase the rates, such authority "lies squarely with the Secretary of Defense pursuant to 37 U.S.C. § 1011" and, more specifically, with the Under Secretary of Defense (Comptroller) (USDC), in accordance with Department of Defense (DOD) Instruction 1338.10 (June 5, 1991). In sum, the Employer’s cost figures demonstrate that "cash sales to civilians literally prevent the Navy from fulfilling its statutory obligation" to operate in an "efficient and effective manner," as required under 5 U.S.C. § 7101(b).

    Analogously to the circumstances in North Island, there are 11 commercial establishments and 2 mobile canteens that provide civilians with comparable alternatives to the galleys at NASL. The Employer also provides vending machines, refrigerators and microwave ovens "to allow for storage, warming and consumption of food items of choice as an additional option." In addition, the Employer’s statistics show that on a daily basis, 65 percent of the employees represented by the Union "dine somewhere other than the galleys," undercutting its claim that isolation is as big a problem as it suggests. Further, the Union’s attempt to compare NASL to San Clemente and San Nicholas Islands, which received waivers from CNI’s policy of ceasing cash sales to civilians, is misplaced. Unlike NASL, they are located approximately 60 nautical miles off the California coast, and have "extremely limited dining options." Finally, the Union’s proposal to continue cash sales to BUEs but to raise rates is "curious" for a number of reasons. It is unclear why the Union would agree to pay $5 more per ration if it does not accept the Employer’s contention that the Navy is losing money. The Union also provided no data to show how it arrived at that figure, or "how galley workers could distinguish BUEs from non-BUEs."

    The Union proposes the following wording:

    With respect to the cost of continuing to permit cash sales, "the figures provided by the agency are inaccurate and misleading." The September 2004 memorandum establishing CNI’s new policy indicates the cessation of cash sales would be "until the USDC can set new rates for meals." Documents provided by the Union establish that, in accordance with DOD instructions and regulations, the USDC has set a new rate, effective January 1, 2006, that raised the cost of a daily ration to $9.05. Consistent with these same regulations, certain items the Navy included in its cost calculations (i.e., the cost of military personnel, facilities, and equipment) "should not have been included." Using the Employer’s own data, therefore, the total cost of meals served to civilians in FY05 was only $7.76 per daily ration. Because the Employer is collecting $9.05 per ration, "there is no loss at [NASL], and thus no impact to the agency." Nevertheless, as a way of settling this matter, "in good faith," the Union has proposed that BUEs pay $5 per day more for a ration until the USDC establishes a new meal rate.

    The CNA study the Employer relies on to justify its position "was done to promote contracting out of the galley facilities," and was not a fact-based report on the cost of feeding civilian employees on a cash-sale basis. The only data that exists on the actual cost of feeding civilians is contained in the USDC annual report provided, in part, by the Union. In fact, "if the Navy had acceptable data there was a loss to the level they claim, it would have been presented to DOD and acted on." Put another way, if it were true that the USDC has not set the rate at a level that would recoup the cost of cash sales, "the Navy would be arguing that the USDC willfully was violating 37 U.S.C. § 1011." The Employer’s claim that the primary mission of the ashore galleys is to feed only enlisted personnel on rations is similarly flawed. In NAVSUP Pub 486, the Navy "has arbitrarily reworded" DOD Instruction Number 1338.10, which states that "it is DOD policy to provide the highest quality and cost-effective food service to authorized military and civilian personnel" (emphasis added). Finally, it is odd for the Employer to argue that raising the cost of meals is not viable because it would cause civilians to eat elsewhere when that is "the point of the agency ceasing cash sales."

    Having carefully considered the parties’ responses to the Order to Show Cause, we shall order that BUEs continue to be allowed to eat in the NASL galleys in accordance with the rates set by the USDC. In our view, the record demonstrates that the alternative dining options available to BUEs at NASL, particularly in the OPS area, are more limited than those at North Island. More importantly, however, we are persuaded that the Employer’s argument that current rates do not allow for the collection of the full cost of each meal sold, as required by applicable regulations, are more appropriately directed to the USDC than to the Panel. While the Union’s approach of raising the meal rates appears to be reasonable in the circumstances presented, we defer to the authority of the USDC to set the proper rates, in accordance with 37 U.S.C. § 1011.

    Pursuant to the authority vested in it by the Federal Service Labor-Management Statute, 5 U.S.C. § 7119, and because of the failure of the parties to resolve their dispute during the course of proceedings instituted under the Panel’s regulations, 5 C.F.R. § 2471.6(a)(2), the Federal Service Impasses Panel, under 5 C.F.R. § 2711(a) of its regulations, hereby orders the following: